EUROPE - The pensions industry is set to revolt over EU attempts to reignite the issue of solvency standards in pension schemes.
Last week, GP's sister paper Professional Pensions exclusively revealed the contents of a 17-page draft European Commission green paper outlining plans to deliver an “adequate, sustainable and safe” European pensions system (GP, June 17).
Key recommendations of the paper included adopting a Solvency II approach to pension scheme funding “consistent with insurance regulation”, revisiting the regulation of funded schemes and a reassessment of the Institutions for Occupational Retirement Provision directive.
Influential industry bodies the Confederation for British Industry and the National Association of Pension Funds said they will oppose the measures.
CBI head of pensions policy Neil Carberry argued The Pensions Regulator and the Pensions Protection Fund already provided a robust system to protect members’.
“Further costs are unnecessary and will be counter-productive,” he said. “Businesses are already struggling to maintain funding plans as it is. The commission needs to learn the lessons of the IORP directive before it takes new steps.
“The flight from cross-border status, driven by the funding levels the directive requires, led to many savers having to leave schemes.”
NAPF senior policy adviser James Walsh said replicating solvency measures imposed on insurers would be inappropriate for pension funds because they meet their liabilities over decades.
He said: “It would be wrong to think that an off-the-shelf solution from another sector would be appropriate for pensions.
“The idea behind a solvency regime for pensions is that it would strengthen protection of members’ benefits. But we already have an extensive system of regulators and regulations intended to do just that.”
Hogan Lovells International head of pensions Jane Samsworth argued the proposals would undermine the financial sustainability of many sponsoring employers and “should be resisted”.
A department for work and pensions spokeswoman refused to comment until the paper was officially published.
However, she added: “Government would always urge the commission to take into account the impact of its policies in the UK.”
The document was due for release yesterday, but failed to get onto the college of commissioners agenda on time.
This week's edition of Professional Pensions is out now
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